Fiscal Responsibility: the New Racism

[T]he Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by IBD. 

Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist.

Eric Holder, not content with running guns to Mexican drug cartels, now wants to kill the solvency of American banks.  It seems denying loans to low income applicants is not good business or a prudent move, especially in light of record foreclosures . . . ah, no, to Holder it is racsim.

Oh, I'm sorry, not low income people - minority applicants are the ones to gain favorable treatment from banks, else the banks face litigation.

For example, the government has ordered Midwest BankCentre to set aside almost $1 million in "special financing" for residents living in predominantly black areas of St. Louis. The program includes originating conventional home loans at fixed prime rates for African-American borrowers "who would ordinarily not qualify for such rates for reasons including the lack of required credit quality, income or down payment."

Oddly enough, if I presented my lily-white ass at the bank with the same lack of qualifications, I could expect to be denied.  WHat is the difference?  With me, it's just good business.  With a Black person from St. Louis, it is insidious racism, inherent in the US banking structure.  Who knew?

Or the threat thereof.  It seems "non-disclosure" is controlling in settlements - "don't tell other banks how we determined you were 'racist' so we can see how far we can get with this scam."  Are the theories of the DOJ in alleging that the refusal to make risky loans due to discrimination against minorities sound? 

One such theory — "disparate impact" — holds that merely a difference in loan application outcomes is enough to prove racial discrimination — even if no intent exists on the part of loan officers to contrast based on the color of applicants, and even legitimate business factors — such as credit scores and down payments — help explain disparities in loan outcomes between white and black applicants. 

Under this broad theory, banks have been accused of racism simply for failing to open branches or aggressively market mortgages in black neighborhoods — regardless of the demand for, or viability of, such loans in those areas.

Redressing wrongs or being punitive?  This is not a program designed to look at the problems that arise when someone who has no income save government entitlements and a bad credit report cannot qualify a loan and see what can be done in that case - for example, loans with down payments of less than 20% are subject to private mortgage insurance so as to address the risk that the bank is assuming.  This is a new morality play in the DOJ's mind. 

In announcing a recent $2 million settlement with Dallas-based PrimeLending, Civil Rights Division chief Tom Perez said, "We will require lenders to invest in the community that they've harmed."

Another Reno protege, Perez has compared bankers to Klansmen. Only difference is, he said, bankers discriminate "with a smile" and "fine print." He said this kind of racism, though more subtle, is "every bit as destructive as the cross burned in a neighborhood."

What harm?!

Loan approval as envisioned by the DOJ

The denial of civil rights based upon one's race of ethnicity is bad and a violation of law.  Rights.  You do NOT have a right to a mortgage, you do NOT have the right to buy a house . . . or a car . . . or a yacht.  These are goals that require certain criteria - such as stable income and good credit.  You may even be able to argue that race should not be a barrier to the opportunity to attain a mortgage - but understand, simply because you have the opportunity, it does not mean you are guaranteed the result that you want.

In our current financial crisis, the banks have been hard hit.  They do not need this unncessary and fiction-based shakedown by Holder & Co.  What happens when these "reparations" lead to more foreclosures?

Oh, Eric Holder doesn't care.  He figures him and his cohorts - including Barack Obama - will be long gone . . . with the money.

Perez has required bank defendants to earmark potentially millions in funding for inner-city community organizers — who must be approved by Justice. Critics say lenders are being forced to bankroll Acorn clones that often exist just to shake them down for risky loans. 

[DOJ spokeswoman Xochitl] Hinojosa declined to provide a list of these "qualified organizations."

There, there is the transparency promised by Obama - another falsehood, another lie.  When will people wake up and demand an accounting? 

Quis custodiet ipsos custodes?  The mainstream media has long ago divested themselves as the guardians of the truth. 

BTW, low income does not mean there is no person in that category who can qualify for a loan.  Smaller mortgages, pooled resources, larger down payments . . . I have seen it happen in Hispanic and Asian neighborhoods among "low income" persons.  Start out small, work your way up.  Maybe the kitchen doesn't come with travertine marble counter tops, and maybe you and your sister's families live together for a few years while saving for the next real estate investment . . . but it does happen.  WHo will be the champion of these people when their neighborhood lender has gone belly up from having to write bad loans to satisfy Eric Holder?

Updated: 
Three more U.S. banks failed Friday, including the first this year in Virginia and Indiana, according to the Federal Deposit Insurance Corp.   With the latest failures, 61 banks have failed in 2011 . . .